Durable Goods ... Factory Orders ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” - Peter Lynch, former manager of Fidelity’s Magellan® fund.
 
HARRIS’ UNREALIZED GAINS TAX IS HISTORICALLY STUPID (The Hill)
“I see a lot of people on Twitter desperately trying to defend the insane, suicidal tax proposed by Vice President Kamala Harris on “unrealized capital gains.” It’s been a while since anyone has proposed a dumber idea, so in that sense, at least, she is a historic candidate. And those who think it’s a good idea are historically stupid.” - Derek Hunter, Opinion Contributor. Story at...
Opinion: Kamala Harris’s ‘unrealized gains tax’ — so dumb it’s truly historic (msn.com)
 
“Let me tell you why I don’t think a blanket tax on unrealized gain is a good thing. I mean, let’s say you’re an entrepreneur, you create a company, and it gets to $100 million or $200 million on paper,” Khanna said. “Now if you’re taxing that, you’re probably going to force that person to sell it. They’re probably going to sell it to private equity. Do you really want the entrepreneurs to be forced to sell their companies to larger institutions and to decline in value? I just — I don’t think that that’s what you want for a startup ecosystem.” - Ro Khanna, Democrat, US House of Representatives, California 
 
DURABLE GOODS (Advisor Perspectives)
“New orders for manufactured durable goods rose to $289.65B in July, the highest level since November. This represents a 9.9% increase from the previous month and better than the expected 4.0% growth. The series is up 1.3% year-over-year (YoY).” Analysis at...
https://www.advisorperspectives.com/dshort/updates/2024/08/26/durable-goods-orders-july-2024
 
FACTORY ORDERS (RTT News)
“After reporting a steep drop by new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Wednesday showing factory orders rebounded by slightly more than expected in the month of July. The Commerce Department said factory orders spiked by 5.0 percent in July after plunging by 3.3 percent in June. Economists had expected factory orders to surge by 4.7 percent.” Story at...
https://www.rttnews.com/3472955/u-s-factory-orders-rebound-slightly-more-than-expected-in-july.aspx
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 0.2% to 5520.
-VIX rose about 3% to 21.32. 
-The yield on the 10-year Treasury declined to 3.757% (compared to about this time, prior trading day).
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – added more 7/26. This reestablishes the position I had before this recent weakness.
UWM – added 7/15.
QLD – added 7/24.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread remained Neutral at 10 Bear-signs and 12-Bull. (The rest are neutral. It is normal to have a lot of neutral indicators since many of those are top or bottom indicators that will signal only at extremes.)

The Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators) remained +2 (2 more Bull indicators than Bear indicators). The 10-dMA continued down, a bearish sign and that’s a worry.
 
TODAY’S COMMENT:
Although I don’t use this indicator, the 7-Day VIX Rate of Change is suggesting the bottom was yesterday. As Tom McClellan wrote, "...any reading above around +20% [for VIX ROC] is a pretty good sign of an oversold bottom for stock prices, one that is worthy of a bounce...” Wednesday’s VIX-ROC was 34.
 
There are other signals that are not as optimistic:
-The S&P 500 closed below its lower trend line on consecutive days.  That can be a signal for a trend change. In this case it would signal a possible trip to the prior recent low of 5186.
-Tom Lee was on CNBC’s “Squawk Box” Tuesday and he said that a 7-10% pullback is likely due to election and Fed concerns.
-The 10-day moving average of 50-indicators is falling.
 
I would have cut my leveraged positions today, but Verizon cut my service because they haven’t gotten my payment. What used to be a 6-week grace period is now down to 2! Verizon non-customer support was of no use. The foreigners at the phone-center had no explanation and no fix so I decided to wait until they get my payment (mailed more than a week ago). That meant my 2-part login process at my broker was not available.  I could have called a human there and sold positions, but that seemed like too much trouble.  
 
BOTTOM LINE
Time to get neutral and watch indicators. The 10-day moving average of 50-indicators is now falling and that’s a worry.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
 

The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
 
DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
 

The top ranked Stock receives 100%. The rest are then ranked based on their momentum relative to the leading Stock.
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained HOLD. (My basket of Market Internals is a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.) 
 
 
 

...My current invested position is about 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks when markets are stretched; my current stock position is above the norm. (75% is my max stock allocation when I am strongly bullish.)
 
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. When I see a definitive bottom, I add a lot more stocks to the portfolio, usually by using an S&P 500 ETF as I did back in October 2022 and 2023.